It’s common for commercial searches to draw on Google’s vast amounts of real-time data—e.g., what pizza shops are currently open, how busy they are, and customer reviews. This is a key reason AI chatbots haven’t yet made a dent in commercial search. The datasets used to train AI models aren’t constantly updated, and so they still need to be connected to a search engine to provide the most accurate and relevant live data. For now, AI chatbots are generally better suited to non-commercial searches, such as informational searches, which contain fewer advertising opportunities—for example, “what temperature to bake a pizza.” (However, Morgan Stanley’s survey did find that ChatGPT is gaining ground in travel research, particularly among teens and young adults.)
Over time, these distinctions may become less relevant, especially if people become more habituated to the interaction style and output of AI chatbots. However, it’s not as if these chatbots are on the verge of eating Google’s lunch and Google is standing by doing nothing. Both Google and its parent company are helping lead the way in AI-powered search with their own large language model, Gemini. For example, there are now Gemini-generated summaries at the top of Google search results as well as an AI search mode that can respond to natural language prompts and more complex questions. The company is also incorporating AI image-recognition capabilities into its products. In fact, Alphabet is the only true full-stack AI player because it has proprietary hardware and infrastructure (including chips and data-center technology), software (such as the Android mobile operating system and Google Cloud networking software), one of the most advanced large language models, as well as AI products for users across its ecosystem. Amazon, Meta, or Microsoft can’t offer such a comprehensive set of products.
Although there’s the risk that Google’s AI features will cannibalize its search ads by discouraging clicks to other web pages, the company’s future success depends primarily on one thing: maintaining the utility of a Google search. That means being willing to disrupt its own business to address changing user habits. While the search engine started out as purely an intermediary connecting user intent with other web sites, increasingly Google is not an intermediary but the destination itself. A user can often get all the information they need right on the Google search results page. AI is now supercharging that strategy by giving people even less of a reason to click away. For example, when searching “what temperature to bake a pizza,” Google’s AI overview helpfully suggested different temperature settings depending on the thickness of the crust and advised preheating the oven first and watching for “a golden-brown crust and bubbly cheese”—eliminating the need to scroll through results or read recipes for detailed instructions.
Where Alphabet faces a potentially more serious and immediate challenge is its pending antitrust litigation. The company is currently defending itself in two major federal lawsuits, one targeting its search engine and the other its digital ad business. In the worst-case scenario, Alphabet could be forced to share its search index—the underpinning of the Google search engine—to competitors at a nominal cost. If that were to happen, the collapse of Google’s search dominance could be sudden. In the advertising-related case, the judge could rule that Alphabet needs to share its user data for free with advertisers and publishers. However, both of those outcomes would be extreme and seem highly unlikely.
As for AI, the jury’s still out. But it has been more than two years since ChatGPT first arrived, and there aren’t any signs of Google’s imminent demise. Instead, what’s become evident is that Alphabet has a lot of compelling AI technology, and that Google search remains well ahead of anything else.
